The agency theory literature implies the pay-performance based managerial compensation can relieve the agency problem between shareholders and managers. As the interests of shareholders and managers are aligned, managers have incentive to invest in best projects and hence to improve firms’ performance. While the use of equity compensation to managers may reduce the agency cost between managers and shareholders, its impact on agency cost of debts is ambiguous. On the one hand, a large portion of equity compensation discourages risk-averse managers to invest in risky investment and hence reduce the credit risk. On the other hand, while the equity compensation brings the interests of managers in alignment to shareholder it may encourage managers to take opportunistic corporate strategies and to exploit the wealth of creditors. As a result, creditors may response to the CEO compensation package by imposing different covenant restrictions according to their perception of the credit risk. Supported with empirical evidence, this research finds that loan agreement contains more restrictive covenants if the firm’s CEO has a higher portion of option compensation to the total compensation, but contains less restrictive covenants if the firm’s CEO has a higher portion of stock compensation to the total compensation. It implies that creditors view that the increase in the use of option compensation would increase the credit risk of the firm, while the increase in the use of stock compensation would decrease the credit risk. This research also investigates the relation between the CEO option compensation and some specific financial covenants. The finding shows that the use of liquidity covenant and minimum net worth covenant is positively related to the CEO option compensation.

No description available.

No description available.

No description available.

No description available.

No description available.

No description available.

Typescript (photocopy). / Digitized by Kansas Correctional Industries

The focus of this study was to determine the unique contribution to administrative salaries of the following criteria: gender, ethnicity, total years' experience in education, district years' experience in education, degrees held, per pupil expenditure, and school size. The sample was comprised of 1,866 administrators in 27 Texas suburban school districts with an Average Daily Attendance (ADA) over 10,000. The 1986-87 salaries of the following 11 administrative positions were analyzed using a multiple regression equation: deputy superintendent, assistant and associate superintendent, business officer, personnel officer, senior high principal and assistant principal, junior high principal and assistant principal, elementary principal and assistant principal.

Typescript, etc. / Digitized by Kansas State University Libraries